Well written and well composed. A great recipe for success. Good luck with your mission.

Wow! That's a really good article. thanks.

You forgot to add one important point, though:

A lot of music coming out today is horrible - when this will change, the level of piracy just might go down, but I really doubt it.

(doubt that that the music industry will stop promoting crap to the masses).

That is.

So music industry is music's worst enemy, in a way.

I think a perfect example of the Recording industry NOT getting it is this new variable pricing on iTunes, Amazon, etc. They were charging $.99 for everything and there is piracy. Now they have come along and raised the price to $1.29 for popular songs, which I think will just make people question in more especially in harsh economic times. Does the recording industry really think that was a good idea? It boggles my mind.

Chris I am amazed that you are so close to the reality of the music business but you still don't get it. The single song download filled the void created by the Labels when they (the labels) kept selling fifteen dollar CDs with one decent tune. Napster and all the free DLers that followed them made it possible to get just the song you liked and not have to pay that kind of money for the crappy CD. So you had a crisis of ethics, to pay or not to pay. The Labels had the legal high ground while the consumer felt ripped off. Steve Jobs and Apple saved their collective asses. Had the choice been .99 or nothing the artists and the writers might have won out. But the ostriches that ran the Labels had their head buried in the sand so deep that they lost the war without going in to battle. They were simply too late. It is not surprising that they could only respond with their lawyers. Lawyers have had way too much control for a good thirty years now. Now at least everybody gets paid when their songs move. Internet radio is a tool but it will never become the new advertising model.

The music as a product has changes. Before the digital age, music was consumed as physical product, the costumer could listen to the music and resell the product after the consumption. So the value of the physical product was declare by the rule of scarcity. On the digital age, the consumer get music and can share it with all his friends, you can not resell digital music and the rule of scarcity is broken.

So the problem or the crisis is to find new revenue model or marketing methods for music as a product. But remember music is a form of art, so when music is marketing it has to brought to market as an art. So marketers can´t to any thing to try to control the usage of the art or how the costumer consume the art. They have to focus on how it is best to sell the art work and ask the costumer how they want to consume the music, and how they are willing to pay for the art form.

So for the music industry, they have to talked to the customer to learn. They can´t fight them. They have to find new ways, forget about how things where before the digital age. They have to focus on solutions, like Chris is doing. They have to be innovative, have to be on the edge and take the first steps, don´t be followers. At least don´t be a burden of innovative thing, play along.

The music industry have to encourage costumers to act legal, they have to win the PR-war between them and illegal downloads. The accessibility of music have to be as got or better for legal music reselling as it is for illegal downloading. The monopoly of music distribution is over for the music industry, the distribution are following other rules then it used to do.

1 It's about the quality of the music. And to much of what is pushed on us by the major label marketing machinge is geneeric cookie cutter stuff. There is great stuff out there, But it is not on major labels and so therefore our media does not pay any attention to it.

2 It's about the packaging. You have to create the kind of packaging that makes people want to own what they can't download Illeaglly.

3 (.....and this is the toughest one) It's all about peception. We have raised a generation with little or no musical education. As a result, they have no ability to understand or appreciate what it takes to be a Beethoven or an Eddie Van Halen. We have raised a generation to worship fame and money over talent and substance. If you think this last statement is a bit harsh, think of how many people admire Paris Hilton who is famous for nothing. They admire her for her fame, and not for any real talent.

I believe these problems stem from the old-timers (Clive Davis, Barry Weiss, etc) that don't cope well with change. As much as they think they are "in touch" with the industry I think they are far from it. What does a 70 year old know about a 20 year old and their music tastes? Probably very little- however they THINK they know because the music they put out still sells. However in reality it is NOT what the average consumer wants. The consumer purchases it because it's the only thing offered.

It's time for the younger generation (30 year-olds) to clean up this mess in the higher corporate positions. There are also thousands of college students graduating each year with a music business degree that can substantially aide in the re-shaping of the industry. We are, in fact, the target audience. Do we have the real-world experience to run the industry? Absolutely not- but that's not the point I'm making. The point is that younger generations are the ones that are in the most touch with reality and know what's hot- especially with indie artists. We can definitely advise and contribute valuable information to higher ups.

As far as the other points mentioned: I agree with them all. Technology is the future yet it still seems the industry and labels haven't made much progress in adapting- nor have they tried to make substantial changes.

We KNOW the problems...what are your realisitic solutions that the industry hasn't tried?

It's simply an economic form and pricing model issue. DRM was one way to preserve the scarcity of the economic product called "pre-recorded music". There was backlash. That is a whole topic in itself. Now everyone seems to expect prerecorded music to be free, ubiquitous and abundant. The only entity that is scarce is the live performance, hence the prerecorded tracks become merely promotional vehicles for the live performance rather than the other way around -- as it was originally when records were the scarce commodity. Yet historic concert recordings are often made available over the internet.

Think about the relationship to the movie seen in the theater and the DVD release. A similar relationship has ensued -- to see the movie when it first comes out you pay $10 for one showing. If you wait a month you get the DVD for $10. Hmmm... why does the passage of so little time make such a pricing degradation? There is a temporary situational monopoly when something is first released. Similarly with live music, the ability to see your favorite performer in your hometown is unreproducible at that moment, hence ticket prices can be in the stratosphere (OK, I think $300 is pretty high).

What I predict is auction-based pricing models to develop over time. Some new songs by no names will go for $0.01 a download. Others will be higher, such as $500 per download per song (like when the next Miley Cyrus stuff comes out)! But the price will self-correct and eventually settle out into something more reasonable.! There will need to be a viable DRM, but the pricing must be so low for most of the songs, especially for the crap or undiscovered artists -- that people won't care about DRM anymore!! They care when they get raped or when there is perceived inequities in the system. Others above noted that $1.29 for the good stuff and $0.99 for the not-so-good stuff doesn't cut it as far as a pricing model. The issue with DRM is no one is willing to price new material so low. The 1c is arbitrary. It could be fractional cents if the numbers are high enough. If you want to track how many copies, make it 100ths of a cent for each one. If you want to track every time it's played make it 10,000ths of a cent for each play. That is the the stumbling block. This idea of service for music and its reproduction and re-experience of the music -- can it be priced low enough to allow control to be re-embraced rather than shunned as it is now? Get over it! The technology is there to count equitably!

OK, I haven't thought through all the aspects of "the accounting" (recall how people game Bestseller lists, etc.), but the market can decide if they want to pay the prices that the distribution engines charge. The main problem I see is NO ONE is willing to be first out with this variable model. What do you think, peeps? Is this the answer? Take it in the shorts on pricing before you get big, but let pricing automagically creep up as people decide they love you? Think about it: 100K downloads x $0.01 still is $1000. Everybody likes bonus points in gaming and competition. For the next 100K you get $0.05, then it goes up to maybe $0.25 for 300K+. Then, when sales drop off, it goes back down, much like the used book prices at Amazon (long-tail pricing). An interesting behavioral by-product would be for people to actually focus more on seeking out the undiscovered artists before the price gets to high. Think about it. Who wants to change the world with me?

I don't mean to compound the problem, but I think we're omitting the state of the concert industry right now. Ticketmaster/LiveNation have a monopoly of tix sales, and scalpers are forcing true fans out of a ticket they would otherwise be happy to pay for. Also, I think many of the "problems" cited above are actually the path to solutions (Web 2.0, satellite radio, etc). It's only the industry itself that is making them "problematic." The industry needs to embrace the idea that recorded music holds a value that is indirectly financial for musicians - while people may not want to pay directly for recorded music anymore, it doesn't mean people don't want to put their money into the music industry. The sooner industry execs realize that, the better off they'll be, in my opinion.

Shannon you support my argument precisely. The industry is to blame! We have many outside resources (and even inside) but choose not to look at them or if we do are afraid to implement them in fear of failure. Like I previously said- none of this will change unless the old-timer exec's retire and let the young blood move up to make change. How will that happen? The youngin's need to overpower them- that can simply be done by voicing our opinions!

I haven't been to any but there are many music industry conferences that occur...are these topics brought up? As with everything people are all talk but don't walk.

It would be nice if this were a top 10 list! Have you considered playing live gigs or touring as part of the problem or a symptom? Stadium rock is almost dead and gone. Ticket prices are through the ceiling. Top artists can barely sell a solo tour. Independent bands don't get paid for playing live and are held accountable for how many fans they bring in the door. I can't seem summarize the overall problem, but there have been dramatic changes in live shows and touring...venues are closing their doors.

"Do you see anything missing from the list?"

o Growing gulf between recording industry executives and reality. Much of the RIAA's efforts you describe are akin to building a moat around a sand castle on the beach. True, a certain measure of "security" against hermit crabs can be afforded by the widespread use of water, but in the end, water turns out to the bigger threat when the sand castle crumbles into more hermit crab habitat...

o Better recordings are being made and given away today than ever! More semi- and non-professional artists are pursuing their muses freely and unfettered by devil's-pact compromises with pop market suits. And on equipment that makes Abbey Road look like fifty year old technology. A HALF A CENTURY AGO! Think of it... there are John Lennons in their dorm rooms cranking out stuff that will never ever ever see the inside of any label's trash can. Instead, it's going straight to play.fm or digital distribution courtesy of cdbaby.com.

o More genres of commercially nonviable music than you can shake a hooty stick at. There's electrojazzica, industrial swamp genre, loco momo no no, Tahitian stick jazz, Fire a go go, etc. Thanks to an insatiable demand for free music, there's a viable download statistic to appeal to even the snootiest egotist.

the crisis :
"In addition, Apple's 30% take on each track sold leaves little for the artists and songwriters."
so that leaves 70 cents on the dollar but the musicians and songwriters are left little?
maybe the crisis is those who are taking the biggest part of the pie.
"a necessary evil for struggling funding partners (Labels, publishers, Management, etc. . )."
key word EVIL!!!
when was the last time you bought sheet music? Labels as gate keepers have been the biggest pursuer of the loudness war which has ruined the sound quality of recorded music.
radio is now owned by so few that ... music does not matter, it is ad revenue.
maybe the need is for a paradigm shift where the industry need to charge only for services rendered not services perceived.
music is about the performance.

honestly, 30% is not that bad as a commission, the problem is in the delivery. it's not hard to get your music on itunes, but its a pain in the ass to use the aggregators and it is a bit frustrating to have to pay $30 to get it on itunes and then $20/ year just to keep it.
Though this does act as a filter to a certain extent, since music that will not sell much, is better off not using itunes. They do make it annoying for EPs, since the cost per song is even higher. Also, how are we sure about the transparency of accounting especially when we use aggregators, which will always be an issue.

I think it ultimately comes down that to be a successful musician, you must learn to monetize areas other than music sales, as I believe that on average this piece of the pie will only continue to decrease in size. I could go on/....

Chris,

I applaud you for taking on such a relevant topic. You've generated tons of comments on this, hence, that in and of itself is of great value.

And you've gotten a new RSS subscriber from me as well.

Missed issues? Well, of course, in something like this, there are always more issues, but you got a lot of the big ones and I pretty much agree with your points. Where it will all lead is another matter.

As a musician/technologist and someone at times heavily involved in music software, there are some significant changes going on from the point of view of the musicians. For instance, very similar to the typesetting industry, at one time the chance of musicians producing their own material on their own was slim unless they were already rich. (Even then, it would be considered quirky.) So one of the important purposes for a musician to connect with a record label was access to good recording equipment and people that knew how to use it. But now desktop music studios have happened the same way that desktop publishing turned over the printing industry in the 80's and 90's. So while the record labels (not that I'm entirely sympathetic) have had their foundation ripped away at one end by internet publishing and piracy, on the other side, their foundation gets ripped because music artists now have far more ways to publish their material, many not involving a major label at all. Still, record labels have been a major distribution mechanism for a long time and you only have to wander into the Best Buy music department to understand what that was and is about.

And, lastly (and this is my current field), there are the new opportunities to have fun with music from Guitar Hero and Rock Band to Karaoke and Dance Dance Revolution to Wii Music. So much has happened here in the last few years. Older acts are suddenly new again (e.g. Slash) and some major acts sell more copies of new material through a game than through other media, as crazy as that sounds. Also, some new acts have become big simply by having done demo material for music games.

Yes, there is a lot to these questions.

Bruce

I've seen your article and post previously and my comment was and is that the illegal files could be stopped if enough people cared. That is my point - too many people don't care. And there are some making money on this traffic so they won't stop it, they want to "keep the internet open" .And the Creative Commons movement would seem to legally do away with a lot of those now stolen revenue streams by legally "keeping the internet open".